USWC and Southern California Ports – An insider’s guide to this season’s holiday and peak season surge.

We recently had the opportunity to discuss current US West Coast and Southern California port market conditions with Peter Schneider, President of TGS Logistics, Inc. TGS is leading west coast trucking and drayage company and one of Laufer’s key valued logistics partners.  As an industry insider, Peter consistently provides regular commentary and feedback on the current conditions that face all of our businesses.

In order to provide our clients some additional information and perspective from someone on the front lines of these issues, we asked Peter to share some of his insights and suggestions on what this market is experiencing and what critical issues need to be addressed.

Peter, we hear a lot about the issues of congestion, bottlenecks and lack of equipment. What about the issue of personnel and labor at the ports?

“This is not being talked about much, but there are not enough steadies or Block A and B labor to handle all the volume arriving in LA/LB.  More casuals need to be trained and hired as permanent employees.  This is a huge cost to the PMA and needs to be addressed alongside automation at their next contract…which is 7/1/2022; we can’t wait that long. On top of that, there are currently around 700 labor jobs not being filled daily due to COVID, that is critical in getting ships unloaded and a big reason for the back up in LA/LB.”

Beyond the obvious issue of lack of equipment, why have chassis become even more of a critical issue now?

“With volumes at peak season levels, and looking to stay that way for the time being, there needs to be an infusion of chassis permanently into the POP in LA/LB; with a huge embargo or tariff (not right wording) with manufacturing chassis in China, and all the chassis taken around the country, where do you get them…Mexico is ramping up their production, but this takes time. The POP in LA/LB has only decreased since 2015.  Even though trucker owned chassis have increased a lot, the POP needs an infusion of chassis; maybe 10-15,000 is the number I am hearing.”

 What needs to be done to address the impact of equipment congestion at the ports?

“Empties evacuated out of the harbor - With this new norm of volumes, there needs to be a way to get empties evacuated regularly, not just at the end of a large surge.  This surge may not go away for several more months and we need land/space to return more empties. We also need to think outside of the box and change how we do things.  Chassis need to be offdock. A certain amount of empties too; especially for Oakland”.

How has the volume surge impacted your business and other drayage providers and what needs to be addressed?

“Empty return appointments need to be figured out.  …, it is hard to get space to return empties, but why does this fall squarely on the trucker?  The MTO, SSL and trucker need to figure this out. It is costing the BCO hundreds and thousands of dollars per week of extra storage and chassis charges.  Every day is roughly $75 per container.”

 “Import load appointments.  We need more opportunities to get an import box.  Generally we get one try out of 8-9 shifts due to the appointment system.  Again, the supply chain is severely overloaded and looks to stay this way for some time. We need a robust and flexible reservation system…not appointment system.”

 What about the resulting high costs and frequency of detention and demurrage charges many are seeing as a result of the issues you’ve highlighted so far?

“The FMC is looking into this, but we need action soon because how DnD works now was not the intended business purpose… We need the SSLs to follow the Interpretive Rule put out by the FMC in the fall of 2019, and put on the record last spring”.

 It is clear that the peak and surge related issues are impacting importers but what about the impact on exporters?

“ERDs (Early Return Dates) and information updates – when a vessel is sitting in LA/LB for a week, why isn’t the booking and details updated regularly for the next ports of call?  ERD and cutoff changes need to be updated more timely and someone needs to be held responsible.  MTOs and SSLs point the finger at each other. The exporter is loading a container, the ERD changes, then the load sits in storage at $75 per day for a week or two or sometimes longer.  If you are a large shipper, that is a lot of money!”

You mentioned the FMC earlier. As part of their responsibilities defined under the provisions of the Shipping Act, they have gotten involved to investigate and help address many of these issues.  You specifically have called for a review and rewriting of the Shipping Act of 1984. 

 “Yes, if you didn’t know the Shipping Act was written in 1984, and has only had minor tweaks since…one of them being in 1998.  The industry has completely transformed since then with SSLs getting out of the chassis business (partially/mostly?), the lines don’t own terminals as much as they used to, appointment systems, and many other things.  We need to refresh the laws to reflect what the industry is; then hold each supply chain actor accountable for what they control.”

 In addition to rewriting the Shipping Act, what else is needed?

“One stop shop portal for all.  Information needs to be easily accessed by all who need it. It can be regionalized, but the industry needs a portal for all to go to.  The technology is there, the information just needs to be pushed and pulled from a central location so all can work through.  We currently have to go to dozens of websites, some of which don’t match with others, and try and figure out how to best help our customers.  It is so antiquated.  Think of FedEx or UPS, you can track your shipment with a tracking number…this industry can be set up the same way”.

 Any final takeaways that you would like our readers to know?

“This is just a partial list of what we are faced with that needs to be addressed.  It is important to know that the system is overloaded. The number of anchored vessels in the San Pedro bay has been increasing for several weeks now and reaching levels not seen since 2014-15.  Levels the first week of 2021 surpassed 2014-15.  Things are not flowing as intended with vessels backed up and delays everywhere, and there are extra costs associated with this.  According to multiple sources, many think that the import surge will last not only through CNY (Chinese New Year), but through most of the spring. This list needs to be addressed or we will not have much reprieve as I think some of these levels of volume will be a new norm as e-commerce took a huge leap forward this year. In short, to really help solve this, the import surge needs to decrease by 5-10%, and more labor needs to be on the job.”

Thank you, Peter.  We all benefit from your insights and valuable information especially during this turbulent time. Looking forward to learning more as we continue to move into 2021.